Ofwat has published its new strategy which sets out how it plans to develop economic regulation of the water and sewerage sectors in England and Wales.

Introducing the strategy, Ofwat Chairman Philip Fletcher said:

"The water and sewerage sectors face tough new challenges in serving water consumers. Each company must cater for changing populations and rising consumer expectations while also mitigating and adapting to the effects of climate change. We need to change how we regulate to help companies meet these new challenges. Our strategy is the first step in this direction."

Water and sewerage companies have made huge improvements in response to regulatory challenges. Around £70 billion will have been invested by 2010, and the companies have delivered better standards of service and improvements to the environment and drinking water quality.

Philip Fletcher continued:

"But to meet the new challenges we all need to think and plan long-term. The strategy we have published today sets out our long-term priorities, and the programme of work we plan to deliver in the next three years to protect consumers, promote value and safeguard the future.

"Innovation and creativity will be needed, and in other sectors these are driven by competition. We have committed ourselves to introducing competition progressively in the water and sewerage sector where it will benefit consumers.

"But where competition is not possible or strong enough to protect consumers, we will continue to regulate effectively monopoly service providers to deliver high-standards of service."

A key part of Ofwat's work over the next three years will be the price review. Ofwat recently published its final approach to setting price limits in 2009. The approach will continue the rigorous challenge that Ofwat has always brought to its scrutiny of companies' business plans to make sure they deliver value for money for consumers.